The Employee Retirement Income Security Act (ERISA) requires that plan administrators give participants and beneficiaries a Summary Plan Description (SPD) describing their rights, benefits, and responsibilities under the plan in easy-to-understand language. Your Recordkeeper and/or TPA provides the SPD.
New participants must receive a copy of the SPD within 90 days of joining the plan. Additionally, a plan sponsor must provide a SPD within 30 days of it being requested by a plan participant. When a plan is significantly modified, participants and beneficiaries must be provided with a revised SPD that reflects the changes.
What is Included in a Summary Plan Description?
- Name and type of plan
- Eligibility requirements
- Description of benefits (employee and employer contributions) and when participants have a right to those benefits
- Statement that the plan is maintained pursuant to a collective bargaining agreement, if applicable
- Statement about whether the plan is covered by termination insurance from the Pension Benefit Guaranty Corporation
- Source of contributions to the plan and the methods used to calculate the amount of contributions
- Provisions governing termination of the plan
- Procedures regarding withdrawing money from the plan and remedies for disputing denied claims
- Statement of rights available to plan participants under ERISA
The plan sponsor, when distributing the SPD, must take “measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries.” For example, mailing them to each participant or beneficiary by first class mail is acceptable, but simply posting a copy in the break room or other area frequented by participants is not acceptable.
Providing all of these disclosures to participants in paper form can be very expensive for plans due to printing and mailing costs. A less expensive alternative is to provide this information to individuals electronically, such as through email or by posting the information on the company’s website.
However, participants can only be provided with information about their retirement plans electronically under limited circumstances. Information can only be distributed in this way to: (1) participants who access documents electronically as an integral part of their job duties; or (2) participants, beneficiaries or other persons who affirmatively consent.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.